The Securities and Exchange Commission ("Commission") announced today that, on March 31, 2000, the United States District Court for the Western District of Pennsylvania entered an order of permanent injunction and disgorgement against Appalachian Investment Corporation ("Appalachian") and Dennis G. Cerilli ("Cerilli").

Without admitting or denying the Commission's allegations, Appalachian and Cerilli consented to the entry of the judgment which permanently enjoins them from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The judgment also requires Appalachian to pay disgorgement in the amount of $3,404,714, and Cerilli to pay disgorgement in the amount of $696,255, together with prejudgment interest. The judgment provides that Cerilli's disgorgement and prejudgment interest will be offset by any amounts actually paid by him into the Registry of the Court in connection with any criminal charges that may be instituted against him by the United States Attorney's Office for the Western District of Pennsylvania and that are based, in substance, on the same facts alleged in the Commission's complaint. The judgment reserves the issue of the amount of civil penalty to be imposed on Appalachian and Cerilli.

On March 31, 2000, the Court also entered an order of permanent injunction as to defendants Frank DeBone, Dennis J. Oslosky, Robert C. Walters and John W. Hinton. That order, which was entered by default, permanently enjoins those defendants from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, but reserves the issues of the amount of disgorgement and civil penalties to be paid by them.

In its complaint, the Commission alleged that, between November 1995 and August 1996, the defendants engaged in a scheme to misappropriate investor funds raised through the fraudulent offer and sale of more than $4.6 million worth of securities in the form of subordinated debentures of Appalachian and its affiliate, CCMI, Inc. The complaint charged that the defendants induced approximately 75 investors, most of whom were elderly, to purchase the securities by misrepresenting the degree of risk associated with their investment and the intended use of proceeds raised in the offering. The complaint further alleged that defendants misled investors by guaranteeing them a 10% annual rate of return while providing little or no information about the financial condition of Appalachian, CCMI or its affiliates. The complaint also charged that, rather than use investor proceeds to loan money to an affiliated entity of Appalachian as represented, the defendants used those funds for their personal benefit, to keep their businesses afloat and to make interest payments to existing investors.